Sen. Chuck Grassley of Iowa and Sen. Amy Klobuchar of Minnesota last week led 23 senators in a bipartisan letter urging President Donald Trump to maintain the point of obligation under the Renewable Fuel Standard (RFS) and reject proposed changes that would upend the current successful system.
Requests from oil refiners seeking to push the point of obligation downstream to ethanol blenders or retailers have roiled grain and oil markets in recent weeks after rumors leaked that the White House was considering the changes.
"We believe such changes are unwarranted and indefensible," the senators wrote to Trump. "We strongly urge you to steer clear of administrative changes to the policy that would undermine the program and run contrary to your goals of promoting domestic energy independence and more choices at the pump."
The senators outlined the detrimental effects of changing the point of obligation from refiners to blenders, marketers or retailers, as one prominent refiner is suggesting. Shifting the point of obligation would give refiners little incentive to produce necessary fuel blends, making it difficult for downstream entities to comply, they said.
Changing the point of obligation also would "result in a massive, costly, time-consuming shift in compliance" because small businesses, especially in rural areas, lack the resources needed to comply, the letter said. The program administration would become complicated and "unnecessarily result in significant uncertainty and market disruptions," the senators wrote.
Such a change is widely opposed by fuel marketers, retailers, truck stop operators, petroleum producers and renewable fuel producers because of the added complexity and the undermining of investments that businesses have made to comply, the senators wrote.
"The overwhelming majority of transportation fuel market participants oppose any change to the point of obligation because it would cause massive disruptions and could lead to higher prices for consumers," the letter states.
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